AA joins protest at government's green changes

The Automobile Association (AA) has joined green groups in warning that recent changes in energy policy will harm the climate.

A survey of motorists suggests they will be more likely to buy polluting cars following a Budget change.

Environment groups say in a letter to the prime minister this is one of many recent changes to taxes and incentives that will push up CO2 emissions.

The government said it aimed to keep its promises on cutting CO2.

However, it added that energy policy urgently needed revision.

The AA and the green groups are disturbed by a welter of announcements in past weeks on the environment and energy.

In his Budget, Chancellor George Osborne announced that the nil Vehicle Excise Duty (VED) band for clean petrol cars would be restricted in future to electric vehicles.

This removes a tax break for clean petrol cars and hybrids, which will from 2017 attract the same VED as gas guzzlers.

The AA president Edmund King told BBC News: “If the government is serious about trying to get motorists to drive cleaner greener cars, this is really counter-productive.

“Drivers will not be given the same incentive to go for cleaner (petrol or hybrid) cars so there won’t be the same pressure on manufacturers to produce those cleaner models. We seem to be getting rid of an incentive that worked very well.”

Urgent revision

The AA’s poll suggested 59% of drivers thought the VED changes penalised low-CO2 cars. A Treasury spokesman said the VED change would incentivise the very cleanest zero emissions vehicles.

The environment groups, meanwhile, are reeling from a slew of about a dozen policy shifts which experts say are likely to drive up CO2 emissions.

The government will cut subsidies to onshore wind, commercial solar power, and industrial biomass burning. It has scrapped the ailing Green Deal insulation scheme without a replacement, delayed a mandate for Zero Carbon homes, and reduced a tax on pollution. It has also imposed a carbon tax – the Climate Change Levy – on the very renewable industry it was designed to promote.

Some green campaigners say these initiatives and others comprise the biggest reversal of environmental policies in memory.

Energy Secretary Amber Rudd recently said the government would keep its commitments on climate change, but more efficiently.

“My priorities are clear. We need to keep bills as low as possible for hardworking families and businesses while reducing our emissions in the most cost-effective way.

“Our support has driven down the cost of renewable energy significantly. As costs continue to fall it becomes easier for parts of the renewables industry to survive without subsidies.”

Goals weakened?

A government source subsequently told us ministers had not calculated the likely cumulative effect of policy changes on the UK’s ability to meet its climate change laws.

In a public letter to Prime Minister David Cameron, the UK’s leading environmental groups said: “We welcomed the Conservative manifesto commitment to ‘being the first generation to leave the natural environment of England in a better state than that in which we found it’.

“Unfortunately, 10 green policies which could have helped you to achieve these goals have been cancelled or weakened.

“These policies were developed over many years, often with cross-party backing and the support and involvement of many businesses. Only one of these decisions, to end subsidies for onshore wind, was a commitment from your manifesto.”

Conservative-supporting newspapers have been calling for the reductions in subsidies for technologies like solar. A recent Telegraph editorial said: “The critics often talk about an environmentally sustainable energy regime, but overlook the fact the system must be fiscally sustainable too. Efficiency schemes, like renewable generators, will never be sustainable if they depend on public money.”

But firms in the clean energy sector are furious at the suddenness and extent of the proposed changes in taxes and incentives.

Adrian Scholtz from the consultancy KPMG told BBC News: “The truth is that some of the subsidies have been too high in the past. The government should have started tapering out subsidies a few years ago.

“But a technology like solar has been a great success. It’s made 70% gains in efficiency in the past few years, helped by subsidies. It’s likely to make 35% or more improvements to 2020. Soon it will be able to compete without subsidy – but if the government stops the subsidy now it will just kill the industry.”

Policy reset

The subsidy reductions stretch across most renewable energies, and a government source suggest more cuts are on the way for domestic solar power and renewable heating.

The waste firm Veolia have been hit by a de facto subsidy cut for the electricity they generate from landfill gas. They say they have invested around £10 million in new equipment on the promise of a subsidy through to 2023. This month they were told that subsidy would end in August.

Veolia’s Richard Kirkman told BBC News: “We are very angry that the government has made a U-turn on subsidies agreed until 2023 with just one month’s notice. This isn’t a way to run a government and give business the confidence to invest.

“There’s tens of thousands of jobs at stake in this sector – business can’t continue to invest if it doesn’t know where the government is going on policy.” He said the impact on household bills of renewables policies had been exaggerated.

The government has promised a “reset” of energy policy in the autumn. Analysts say there’s so much confusion over details it is impossible yet to predict the exact effect of changes on CO2 emissions – but that at first sight all the changes are likely to be negative.

They are very concerned about the prospect of major cuts to the energy efficiency budget – which, they say, offers the cheapest route to tackling climate change and energy security.

Friends of the Earth say they suspect that the chancellor has been persuaded by the “luke-warmer” analysis suggesting that climate change may not require urgent action. The Treasury spokesman said the Chancellor supported the policy outlined by Amber Rudd.

When pressed on the question of his attitude to "lukewarmism", a spokesman said it wasn't something the Treasury could provide.

Follow Roger on Twitter.